Crombie v. Portsmouth Mutual Fire Insurance

Woods, J. By a policy which bears date the 16th of September, 1849, reciting that Bicker & Jewett had deposited their note to the Portsmouth Mutual Fire Insurance Co. for $240, and had' made application to be insured against damage or loss by fire, in the sum of $1,500 upon the property, • being stock in trade, described in the application, Bicker & Jewett were admitted members of that company; “ and the company, in consideration of the premises, promised and agreed” to insure to them, their heirs, executors,” &c., “ the aforesaid sums upon the said property, against loss or damage by fire, subject to the conditions and provisions of [397] ibe charter and by-laws of said corporation, for the term of five years.” By the fifth article of the by-laws referred to, “ the highest sum that can be taken on any one risk is $5,000.” The eighth article provides that insurance shall in no case be made on more than one-half the value of the goods, wares and merchandize, and that “ partial losses shall be paid in full, not exceeding amount insured.” By two successive fires, the goods protected by this policy were damaged in the several sums of $505,34, and of $1,451,35, within the term, and the question between the parties regards the amount which the plaintiffs, who have taken by an assignment the interest of Ricker & Jewett, may recover of the defendants; whether the recovery shall be limited to the sum of $1,500, insured upon the property, or extend to the amount of the two losses, each being within that sum, but amounting, in the aggregate, to a much larger one. For the plaintiffs, it is urged that the contract was one of mutual indemity between the. members of the company for the term of five years, by which each was entitled, upon the occurrence of any loss, to a full indemnity, not exceeding in any one instance the sum insured; that their several liabilities to the burdens incident to membership, continuing throughout the term, they ought also to enjoy the protection of the company during the same period. For the defendants, it is said that the premium-note and ¡rate of contribution of the members are adjusted with reference and in proportion to the amounts named in their respective policies, and that to allow indemnities beyond would disturb this proportion and the equities attending it; that by a succession of fires lighting upon one individual, the liabilities of the company would, upon the theory of the plaintiffs, be swollen to such enormity as would itself be evidence of the unsoundness of the position assumed. There is not, perhaps, upon the face of the policy itself. [398] such distinctness as to exclude all doubt as to the exact measure of the rights and liabilities it creates, but it is certainly difficult to find upon any words it contains, an argument for charging the defendants beyond the sum of $1,500. In marine policies of insurance, underwriters have sometimes been held to pay for a partial loss on repairs actually made, and for a total loss besides. But this liability, if not derived from authority, express or implied, given to the assured to labor for the safeguard and recovery of the property endangered of lost, has been gravely questioned as contrary to all principle and the elements of the contract. 3 Kent’s Com. 340; 2 Phillips’ Ins. 464. And if it had not been thus questioned, there is not that strict analogy between marine and fire insurance, which would furnish any cogent reasons for adopting the principle in the latter class of cases. In Curry v. Commonwealth Ins. Co. 10 Pick. 535, and in Trull v. Roxbury Mut. Fire Ins. Co., 3 Cush. 263, the exemption of the company beyond the sum insured, was expressly based upon clauses in the respective policies, limiting their liabilities to that amount. In the latter case, the facts were in substance these: the house of the plaintiff, insured at a thousand dollars, had been destroyed by fire, and with his approbation, re-built by the company at a less cost. It was afterwards again destroyed, and the question was whether the defendants were liable, and to what extent. It was held that they were liable to pay the difference between the cost of re-building and the sum insured. The policy contained a clause limiting the indemnity to the amount insured. The court say, “ The assured is a member of the company so long as the policy exists, and the insurance is for a term of time. He pays a sum in the outset as a premium-note and deposit,” &c. “ He also makes himself liable to [399] pay assessments, to a limited amount, in order to pay losses to other members, should any occur,” &c. “ Such being the contract between the parties, there seems to be no ground to hold that it is terminated by the payment of any loss. The assured, by his deposit-note, is liable to assessments according to the terms of the policy during the whole term; and the land on which the buildings stand is subject to a lien for its security. Were it not for the express limitation in the policy as to the amount of the sum insured, we do not see why the company might not be liable for successive losses.” It may not be necessary, in this case, to draw in question the conclusion to which the court in Massachusetts arrived, or to oppose to it the weighty opinions which have existed against the principle of holding the insurer to pay a greater sum than he has insured upon the property, as being “ contrary to the elements of the contract,” because we think that admitting such a construction of the policy not to be absolutely incompatible with its terms, the liability of the defendants is clearly limited by the by-laws which make a part of the contract. By the fifth section, the highest sum to be taken on any one risk is $5,000. Upon the construction for which the plaintiffs contend, it is impossible to insure even the smallest sum allowed without infringing upon this provision. The clear intention of the by-law is to set a limit to the risk which the company may in any one case incur, and it would be evaded by insuring that sum upon any property, if such insurance involved a liability for total losses toties quoiies. By the eighth section, “ partial losses shall be paid in full, not exceeding amount insured.” This affirmative clause, by the concession of the parties, carries with it the correlative proposition that payments beyond that limit shall not be demanded. Its first member contains the general view that partial losses shall be paid in full. Its second qualifies it by the400 condition that such payments do not exceed the amount insured. If it had been intended that each partial loss should be paid in full, such several payments not to exceed the amount insured, it would have been so expressed, but it is difficult to give such a construction to the language actually used. In the case of Trull v. Roxbury Mut. Fire Ins. Co., the same words received from the court the construction which we give them. .And the case did not differ from the present in any particular affecting the application of' them, except that in the Massachusetts case they were embodied in the policy, and embraced total as well as partial losses, whereas in this case they are adopted into the policy, by reference to the by-laws, and relate only to partial losses. Taking into view the several papers which contain the evidence of the contract, it is impossible to resist the conclusion that the parties did not stipulate for a larger indemnity than the sum insured. That in companies formed upon precisely the same general principles, some insert this limitation in their policies, while others omit it, is rather an argument that the general understanding, as to the claims created by such policies, is, that they do not justly extend beyond the amount insured, than that a different principle of adjusting losses has been adopted. We do not, however, base the decision upon that ground, but rather upon the grounds before stated. Judgment for the plaintiffs for $996,66.